Liberal MPs face suspension for links to ICAC inquiry

By Sean Nicholls, Michaela Whitbourn

Former energy minister Chris Hartcher and central coast MPs Chris Spence and Darren Webber are set to be suspended from the Liberal Party after being named in two major corruption inquiries.

A senior government source confirmed the Liberal Party had begun proceedings against the trio.

Former energy minister Chris Hartcher.

The decision was taken on Tuesday night after the O'Farrell government was dragged into the scandal surrounding the family of former Labor powerbroker Eddie Obeid, with an announcement public hearings would begin in weeks.

The MPs have only just renominated for preselection in their central coast seats for the March 2015 state election.

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But on Tuesday members of Mr Spence's electoral conference for The Entrance were told a meeting scheduled for next Monday to confirm his candidacy was cancelled until further notice.

The Independent Commission Against Corruption will hold a public inquiry, starting on March 17, into allegations of corrupt conduct by public officials and ''persons with an interest'' in the Obeid-linked company Australian Water Holdings.

A second inquiry will be held from April 28 into allegations Mr Hartcher, who is the member for Terrigal, The Entrance MP Mr Spence and Wyong MP Mr Webber ''corruptly solicited, received and concealed payments'' in return for favours.

Australian Water, which became one of the largest donors to the NSW Liberals before the 2011 state election, was allegedly one of the sources of the payments.

ICAC says the first inquiry, Operation Credo, will look at whether, between 2004 and 2012, interests in Australian Water benefited by inflating charges to state-owned Sydney Water corporation.

It will examine allegations ''public officials and others'' were involved in falsifying a cabinet minute relating to a public-private partnership proposal by Australian Water to mislead a budget committee of cabinet.

Mr Obeid and his fellow former Labor ministers Joe Tripodi and Tony Kelly are alleged to have ''misused their positions as members of Parliament'' to try and influence public officials over the deal.

It is alleged that in November 2012 Liberal Party identity Nick Di Girolamo - a former chief executive and major shareholder in the company - and Eddie Obeid jnr tried to mislead ICAC's investigation into whether Mr Obeid snr tried to use his position as an MP to influence public officials over the proposal.

Within hours of the Tuesday announcement, Mr Di Girolamo resigned as a director of the state-owned State Water Corporation.

The second inquiry, Operation Spicer, will look at whether between April 2009 and April 2012 Mr Hartcher, Mr Webber and Mr Spence, along with two former staff of Mr Hartcher - Tim Koelma and Ray Carter - corruptly solicited payments for political favours.

It will also examine whether between December 2010 and November 2011 the MPs and Mr Carter solicited banned political donations.

The inquiry will consider allegations Australian Water Holdings, through Mr Di Girolamo, made ''regular payments'' to Eightbyfive, a company owned by Mr Koelma in return for Mr Hartcher favouring Australian Water interests. The payments were allegedly claimed to be for public relations advice.

Mr Hartcher suddenly resigned from the cabinet in December after ICAC raided his office.

In 2012 Mr Carter and Mr Koelma resigned and Mr Carter was suspended as Terrigal electorate officer after the party referred allegations they had breached donations laws to the Election Funding Authority. A $5000 payment to Eightbyfive, from Wyong builder Matthew Lusted, sparked the referral by the party. Mr Lusted was approached for the payment by Mr Carter shortly before the March 2011 election. It is understood Mr Lusted's name and others were given to Mr Carter by Wyong mayor Doug Eaton, who has refused to comment.